Xi Warns Against Returning to a 'Cold War Mentality'
Comment of the Day

April 10 2018

Commentary by Eoin Treacy

Xi Warns Against Returning to a 'Cold War Mentality'

This article from Bloomberg News may be of interest to subscribers. Here is a section:

“Human society is facing a major choice to open or close, to go forward or backward,” Xi told hundreds of investors gathered on the resort island of Hainan, in a speech that didn’t mention Trump’s name. “In today’s world, the trend of peace and cooperation is moving forward and the Cold War mentality and zero-sum-game thinking are outdated.”

Trade talks between the world’s biggest economies broke down last week after the Trump administration demanded that China take steps to curtail support for high-technology industries, a person familiar with the situation said. The conciliatory tone of Xi’s speech helped bring risk appetite back to Asian markets as shares from Sydney to Hong Kong rose alongside oil and metals and Treasuries extended declines with gold and the yen.

Eoin Treacy's view

As soon as Mrs. Treacy’s old school friends have children she gets a friends request on WeChat. They begin planning at birth to send their child abroad to be educated. Only last week she was approached to be a guardian for one child about to enter high school and to help arrange a scouting trip for another family whose son is now five.

In a highly competitive market like China there is a powerful desire among the elite and middle classes to have one’s child educated abroad. That is only possible because of the country’s improving relationship with the international community in the West. Of course, it is also one of the primary sources of income for an increasing number of educational institutions. This is a small example, but it helps to emphasise that China does not want a trade war while at the same time it does not want to lose face either.

This article from Futurism on the valuation of SenseTime may also be of interest. The introduction of facial recognition software is but one of a range of features being introduced to control freedom of association. China is engaged in an unprecedented attempt at pacification within its borders and therefore does not wish to have a trade war which would upset that objective.  That also helps to explain why it is unlikely China is going to veer from its continued support for its domestic technology companies.

Baidu is country’s leading listed play on AI and is back testing the region of the trend mean.

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